WASHINGTON — Treasury Secretary Henry Paulson said Thursday that a presidential working group wants stronger regulatory oversight of mortgage lenders to avert the kind of credit crisis that is dragging the economy down.

In a new Bush administration initiative that Paulson said is not about “finding excuses and scapegoats,” a presidential working group set up after the 1987 stock market crash is calling for a series of actions designed to avert the kind of chilling housing and credit crunches that are threatening to throw the nation into recession — if it isn’t there already.

“The objective here is to get the balance right — regulation needs to catch up with innovation and help restore investor confidence but not go so far as to create new problems, make our markets less efficient or cut off credit to those who need it,” said Paulson, who heads the working group.

One recommendation calls for federal and state regulators to strengthen oversight of mortgage lenders and another urges state financial regulators to implement strong nationwide licensing standards for mortgage brokers, according to the group’s report, released Thursday.

On Wall Street, Paulson’s comments and the working group’s recommendations failed to give solace to skittish investors. The Dow Jones industrials plunged more than 200 points in morning trading.

The group also called for improvements by credit rating agencies that have been criticized for not accurately assessing risk on complex mortgage investments. These kinds of business transactions eventually soured, driving markets into chaos. The working group also is calling for better disclosures and assessments of risks on investments.

The recommendations come as the meltdown in the housing and credit markets has unhinged Wall Street, catapulted home foreclosures to record highs and forced financial companies to rack up multibillion-dollar losses on bad investments in mortgage-backed securities.

The mess threatens to plunge the country into its first recession since 2001.

The president’s working group on financial markets was formed after the 1987 stock market crash to monitor markets. It includes Federal Reserve Chairman Ben Bernanke and the heads of the Securities and Exchange Commission and the Commodity Futures Trading Commission.

Bernanke said the group’s recommendations “constitute an appropriate and effective response to the deficiencies in our financial framework that contributed to the current turmoil in financial markets.”

More recently, the group has been looking into the causes of the current credit crisis and searching for ways to prevent a recurrence.

In a speech to the National Press Club, Paulson said: “This effort is not about finding excuses and scapegoats. Those who committed fraud or wrongdoing have contributed to the current problems; authorities need to, and are prosecuting them. But poor judgment and poor market practices led to mistakes by all participants,” he added.

The next step, Paulson said, is to push for implementation of the recommendations. He said the working group will continue to assess the situation and consider whether further steps are needed.

Fielding questions after his speech, Paulson repeated comments that a strong U.S. dollar is “in our nation’s interest,” a position long stated by past U.S. treasury secretaries. The dollar has been falling sharply against other currencies, such as the euro. That is helping sales of U.S. exports to foreign buyers because it makes U.S. goods less expensive. But the drooping dollar also is increasing inflation pressures.

The working group also recommended that credit-rating agencies differentiate between ratings on complex investment products and conventional bonds, Paulson said. The ratings agencies also should disclose conflicts of interest, he said.

SEC Chairman Christopher Cox said the role of credit ratings agencies falls within his agency’s purview and that Congress recently gave the SEC authority to address issues including conflicts of interest. “We will use that authority to help restore investor confidence,” he said.

The group also called on issuers of mortgage-backed securities to provide more information about their products, Paulson said. The group urged investors to conduct more independent analysis of investments and be less reliant on ratings agencies, he said.

“There is no single, simple solution to the problems that have emerged … yet we have determined that market participants’ behavior must change,” Paulson added.

The meltdown in mortgage and credit markets first started with problems with “subprime” mortgages made to people with tarnished credit histories or low incomes. These borrowers were especially clobbered when the housing slump dragged down home prices and mortgage rates rose. Home foreclosures and late payments skyrocketed as these borrowers found it increasing difficult — if not impossible — to afford their monthly mortgage payments. Easy credit during the housing boom allowed people to get into homes that they otherwise couldn’t afford. Eventually problems spread from the subprime market to a broader array of more creditworthy borrowers.

“The turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into early 2007,” the president’s working group concluded. “But the loosening of credit standards and terms in the subprime market was symptomatic of a much broader erosion of market discipline on the standards and terms of loans to households and businesses,” the group said.

Paulson said market difficulties — like the one currently being endured — often expose weaknesses that can be overcome with experience.

“That experience often comes from lessons learned from prior challenges and prior mistakes,” he said.